India’s Remarkable Progress in Poverty Reduction: 170 Million Lifted Out of Poverty

India has significantly reduced poverty, lifting 170 million people out of extreme poverty between 2011-12 and 2022-23, as per a World Bank report. Extreme poverty fell from 16.2% to 2.3%, with rural areas experiencing the largest decline. Five states—Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh—led the progress. Employment growth outpaced the working-age population, while inequality trends showed mixed results. Despite lingering income disparities, this achievement underscores India’s strides toward improving living standards and fostering inclusive development.

India has achieved remarkable success in reducing poverty, as highlighted in a recent report by the World Bank. The report, titled “Poverty and Equity Brief,” reveals that 170 million individuals were lifted out of extreme poverty between 2011-12 and 2022-23. During this period, the proportion of people living on less than $2.15 per day—defined as extreme poverty—dropped significantly from 16.2% to just 2.3%.

A Notable Achievement Highlighted by the Finance Minister

On Friday, Finance Minister Nirmala Sitharaman took to social media to underscore this achievement, emphasizing that the growth in employment has surpassed the increase in the working-age population. She noted that rural areas have experienced a more pronounced decline in poverty compared to urban regions. According to the World Bank report, extreme poverty in rural areas fell from 18.4% in 2011-12 to 2.8% in 2022-23, while in urban areas, it dropped from 10.7% to 1.1% during the same timeframe.

Key States Driving Poverty Reduction

Five states—Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh—played a pivotal role in this transformation. In 2011-12, these states collectively accounted for 65% of India’s extreme poor. By 2022-23, they contributed to two-thirds of the total poverty reduction, although they still represent 54% of those living in extreme poverty. These figures highlight the significant progress made within these densely populated regions.

Data Sources and Methodological Improvements

The poverty estimates are derived from two key surveys: the Consumption Expenditure Survey of 2011-12 and the Household Consumption Expenditure Survey of 2022-23. The latest survey introduced enhancements in questionnaire design, sampling techniques, and implementation processes, which improved the quality of data collected. However, the World Bank has cautioned that these methodological changes pose challenges to direct comparisons over time. Additionally, the report flagged potential underestimation of consumption inequality due to data and sampling limitations.

Trends in Inequality

India’s Gini Index, a measure of consumption-based inequality, showed an improvement, falling from 28.8 in 2011-12 to 25.5 in 2022-23. However, the World Bank noted that this decline might not fully reflect the actual state of inequality due to data constraints. In contrast, the World Inequality Database reported a contrasting trend, with income inequality rising sharply. The income-based Gini Index rose from 52 in 2004 to 62 in 2023. Wage disparity remains a concern, as the median income of the top 10% of earners was 13 times higher than that of the bottom 10% in 2023-24.

Employment Growth and Workforce Shifts

A positive trend observed in recent years is the growth in employment, which has outpaced the expansion of the working-age population since 2021-22. The workforce dynamics have also shifted, with more male workers moving from rural to urban areas, while female employment in rural agricultural sectors has risen. These changes indicate evolving patterns in India’s labor market, which could have broader socio-economic implications.

A Milestone Worth Celebrating

India’s accomplishment in reducing extreme poverty is a testament to the effectiveness of targeted policies and sustained economic growth. While challenges such as inequality and wage disparity persist, the significant decline in poverty levels—particularly in rural areas—offers hope for a more equitable future. This achievement not only reflects progress in improving living standards but also highlights the importance of continued efforts to ensure inclusive growth for all.